Value Added Tax
VAT errors compound quietly because the returns are frequent and each one is small. A misapplied rate or a disallowed input claimed repeatedly becomes material over a few years, and it surfaces during a SARS audit with penalties and interest attached. Reconciling the return to the ledger every period is unglamorous and it is what prevents that.
1
Review
How VAT is applied
2
Correct
Fix the treatment
3
Reconcile
Return to ledger
4
Submit
On the due date
5
Support
Audits and queries
How We Work
01
Treatment Review
We review how VAT is being applied across your transaction types rather than only checking the arithmetic. Zero rated, exempt and standard rated supplies get confused, and the error repeats every period until somebody looks.
- Output tax treatment reviewed by revenue stream
- Input tax claims tested for validity and documentation
- Zero rated and exempt supplies correctly classified
- Imports, exports and cross border services assessed
02
Documentation and Valid Invoices
An input claim without a valid tax invoice is disallowed regardless of whether the expense was genuine. The requirements are prescriptive and supplier invoices frequently fail them.
- Tax invoice validity requirements tested on a sample
- Supplier VAT registration status verified
- Missing documentation identified before submission
- Process established for obtaining compliant invoices
03
Apportionment
Where you make both taxable and exempt supplies, input tax must be apportioned. Applying a full claim where apportionment is required is a common and expensive error.
- Whether apportionment applies established
- Method agreed and, where required, approved by SARS
- Calculation prepared and documented per period
- Annual adjustment where the method requires it
04
Reconciliation and Submission
Every return reconciled to the general ledger before submission. The reconciliation is the control, and it is the difference between finding an error yourself and having SARS find it three years later.
- Return reconciled to the VAT control account
- Output and input tax agreed to the ledger
- Differences investigated before submission
- Return submitted and payment scheduled by the due date
05
Audit and Query Support
VAT verifications are common and largely document driven. Where the underlying treatment is sound and the documentation exists, they resolve without difficulty.
- Verification requests responded to with documentation
- Assessments checked against the submitted return
- Objections prepared where an assessment is disputed
- Voluntary disclosure where an error is self identified
What You Receive
- Review of VAT treatment across your transaction types
- Input tax documentation testing with exceptions listed
- Apportionment calculation where applicable
- Periodic returns reconciled to the ledger and submitted
- Responses to SARS verification requests
- Voluntary disclosure applications where an error is identified
Indicative Timeline
Returns follow your assigned SARS period, monthly or bi monthly. A treatment review is a separate exercise usually taking one to two weeks and normally worth doing at the start of an engagement.
- Initial treatment review: one to two weeks
- Return preparation: within each assigned period
- Reconciliation: before every submission
- Apportionment annual adjustment: where the method requires it
What VAT Work Covers
Registration through to submission, plus the treatment questions that generate most of the exposure.
Registration
Compulsory and voluntary registration, deregistration and changes to registered particulars.
Return Preparation
Periodic returns prepared and reconciled to the ledger before submission.
Input Tax
Validity of claims, documentation requirements and denied deductions.
Apportionment
Where taxable and exempt supplies are both made and input tax must be split.
Specific Transactions
Property, imports, exports, and connected person transactions where treatment is not obvious.
Disclosure
Voluntary disclosure where an error is identified before SARS does.
Frequently Asked Questions
When must we register for VAT?
Registration becomes compulsory once taxable supplies exceed the prescribed threshold in a twelve month period, and voluntary registration is available at a lower level. The thresholds change, so we confirm the current position rather than working from memory.
Can we claim VAT on everything we buy?
No. Certain expenses are specifically denied regardless of business purpose, entertainment being the most familiar. A claim also requires a valid tax invoice meeting prescribed requirements, and many supplier invoices do not.
What makes a tax invoice valid?
Prescribed particulars including both parties details and VAT numbers, an invoice number and date, a description of the supply and the VAT amount or a statement that it is included. Missing any of them puts the deduction at risk.
What is apportionment and does it affect us?
It applies where you make both taxable and exempt supplies, requiring input tax to be split. It commonly affects financial services, residential property and some non profit activity. Claiming in full where apportionment applies is a significant exposure.
We found an error in a previous return. What now?
Correcting it voluntarily before SARS identifies it usually results in materially better treatment of penalties. Voluntary disclosure is a formal process with specific requirements, and it is worth doing properly rather than quietly adjusting a later return.
How long must we keep VAT records?
Records supporting returns must be retained for the prescribed period, and electronic retention is acceptable provided records remain accessible and readable. Missing documentation during a verification is treated as though the transaction were unsupported.
Related Services
This sits inside our Taxation practice. Related work: Monthly Accounting and Reporting where VAT is reconciled within the monthly cycle, and Financial and Management Accounting for the underlying records.
